U.S. consumers’ expectations for inflation over the medium term rose to an eight-year high in May, according to a Federal Reserve Bank of New York survey. The median survey respondent anticipated an inflation rate of 3.6% in three years, up from 3.1% in April. The reading marked the highest level since August 2013, while short-term expectations, over one year, reached a record. Fed officials may discuss the data points at this week’s Federal Open Market Committee meeting, in which they will debate the U.S. central bank’s next steps for monetary policy. They follow measures of inflation expectations closely because they believe them to be key determinants of actual inflation. Expected inflation one year ahead rose to 4% in May from 3.4% the month before, the New York Fed data showed.
EU starts sale of first bond backing recovery fund
The European Union on Monday began selling the first bond backing its recovery fund, according to a lead manager. The sale of the
10-year bond is the start of up to 800 billion euros of debtissuance between now and 2026 that will back grants and loans to member states - an unprecedented act of fiscal solidarity on the EU's part that may transform it into a leading European borrower. It will build on 90 billion euros of EU issuance backing the SURE unemployment scheme, another support programme, since last October, which had already given the EU a significant presence in the 27-member bloc's debt markets. The recovery fund debt, given its much larger scale than SURE, is expected to boost the liquidity of the EU's debt and see continued interest from investors keen to buy scarce Triple A rated debt, which also offers a yield pick-up over the bloc's benchmark issuer Germany.
U.K.’s Boris Johnson Delays End of England’s Lockdown as Cases Surge
Prime Minister Boris Johnson pushed back his plan to lift England’s coronavirus restrictions for at least another four weeks to try to
prevent “thousands” more deaths and a surge in hospitalizations. The government was forced to act after modeling showed hospital
admissions could reach similar levels to the pandemic’s first wave of infections in spring 2020 -- a peak of 3,099 a day -- if Johnson
stuck to his schedule to end social-distancing rules on June 21. In a televised press conference on Monday, Johnson said he had no choice but to delay his plan until July 19 at the earliest, to allow more people to get their second vaccine dose. The government is expected to put the delay to a debate and vote on Wednesday in Parliament, where Johnson is likely to face anger from Conservative colleagues for backtracking on what they dubbed “Freedom Day.
Dollar hovers near one-month high with market frozen before Fed test
The 10-year government bond yield (interpolated) on the previous trading day was 1.83, +3.00 bps. The benchmark government bond yield (LB31DA, 10.5 years) was 1.815, +2.00 bps. LB31DA could be between 1.79-1.84. Meantime, the latest closed US 10-year bond yields was 1.51%, +4.00bps. USDTHB on the previous trading day closed around 31.12 Moving in a range from 31.08-31.14 this morning. USDTHB could be closed between 31.06-31.16 today. Meantime, The dollar hovered below a one-month high compared with major peers on Tuesday ahead of a much-anticipated Federal Reserve meeting that could signal a change in the outlook for U.S. monetary policy.
Sources : Bloomberg, CNBC, Investing, CEIC
